Commissioner of Income Tax vs Alim Beg Salim Bhai

J.S. Verma, C.J.—This order shall also dispose of Miscellaneous Civil Case No. 559 of 1981, since both the cases involve the same points.

Both these cases arise out of applications made u/s 256(2) of the Income Tax Act, 1961, for a direction to the Income Tax Appellate Tribunal

to state the case and refer for decision by this court the question of law said to arise out of the Tribunal''s order. Having heard both sides, we are

satisfied that no such direction is required to be made in these cases.

The assessee in each case is a manufacturer of bidis, and follows the mercantile system of accounting. During the relevant year, the assessee in

each case made provision for payment of wages to its workers for the weekly holiday as required by section 21 of the Bidi and Cigar Workers

(Conditions of Employment), Act, 1966. The amount so provided by the assessee was claimed as a deduction u/s 37 of the Income Tax Act,

1961. The Income Tax Officer disallowed the claim for this deduction but on appeal, the Commissioner of Income Tax (Appeals) allowed that

deduction. The Tribunal has upheld the view taken by the Commissioner of Income Tax (Appeals) in a further appeal. Aggrieved by the view

taken by the Tribunal, the Commissioner of Income Tax applied to the Tribunal for making a reference to this court to decide the questions of law

said to arise out of the Tribunal''s order. That application has been rejected by the Tribunal. Hence, this application u/s 256(2) of the Act by the

Commissioner of Income Tax.

The fact that provision has been made in the accounts of the assessee maintained according to the mercantile system, to provide for the liability it

has already incurred during the relevant year u/s 21 of the Bidis and Cigar Workers (Conditions of Employment) Act, 1966, is beyond

controversy. The case does not involve any dispute about the quantification of this liability. The only question, therefore, is whether this statutory

liability having been incurred by the assessee in the manner stated and provision having been made in the assessee''s accounts maintained according

to the mercantile system, the same was rightly allowed as a permissible deduction by the Tribunal. We find that the matter is concluded by the

decisions of this court particularly in Addl. Commissioner of Income Tax Vs. Kale Khan Mohammad Hanif, and Kalekhan Mohammed Hanif Vs.

Commissioner of Income Tax, wherein similar deductions were allowed on the same principle. Since the point is settled by the decisions of this

court following the principle laid down by the Supreme Court in The Kedarnath Jute Mfg. Co. Ltd. Vs. The Commissioner of Income Tax,

(Central), Calcutta, , the question now is merely of on academic character and no useful purpose would be served by requiring the reference to be

made for deciding the point concluded in this manner.

Consequently, the application made by the Commissioner of Income Tax u/s 265(2) of the Act is dismissed. There shall be no order as to costs.